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* UK set to dodge recession; big problems remain: CBI

* Croda rebound leads chemical stocks higher

* Kainos Group jumps on Stifel rating, PT upgrades

* FTSE 100 up 0.3%, FTSE 250 adds 0.4%

June 12 (Reuters) - UK's main stock indexes climbed on Monday as a rebound in Croda International led the chemicals sector higher, while traders awaited a slew of domestic economic data and major central bank decisions this week.

The benchmark FTSE 100 was up 0.3% as of 0818 GMT after posting a third straight weekly drop on Friday on jitters about sustained policy tightening globally following surprise rate hikes by two major central banks last week.

Investors will assess inflation data out of the U.S. on Tuesday for clues on the Federal Reserve's monetary policy decision just a day later.

"Last week’s hikes have got people thinking that a Fed 'pause' this week may not be the slam dunk they think it is," said Michael Hewson, chief market analyst at CMC Markets.

"This week's central bank decisions could go a long way in determining how much further they are prepared to go before they can offer any insight into when they expect to stop raising rates ... if the markets don't like what they hear, we could see a sharp move lower."

The European Central Bank is set to announce its policy decision this week, followed by the Bank of England in the next one.

Back home, investors will also parse labour market and economic growth data this week to gauge the state of the economy and the BoE's policy tightening path.

Meanwhile, the Confederation of British Industry expects the economy to sidestep recession entirely this year. However, deep-rooted problems like weak business investment will persist, the trade body said.

Croda International advanced 3%, steering gains in chemical stocks, after tumbling on Friday following a weak earnings forecast.

Kainos Group jumped 6.6% to the top of FTSE 250 , up 0.4%, after brokerage Stifel upgraded its rating on the tech stock and raised its price target.

Energy dropped 0.8% tracking lower crude oil prices, while miners shed 0.4% on weak metals prices. (Reporting by Ankika Biswas in Bengaluru; Editing by Rashmi Aich and Dhanya Ann Thoppil)